There are no stupid questions. Not anymore. They have been abolished. From here on out, I am prohibiting myself from pitching one of them to a designer. Why? Because they simply do not have the time. I had the chance to talk to a bridge engineer at the last International Bridge Conference in Pittsburgh. I asked how business was going, and he responded with a gasp: "Business is crazy right now. A lot of firms are out there fighting for projects." OK, that was a stupid question, but I was still a couple weeks away from my dum-dum cap.
The latest highway funding bill, SAFETEA-LU, is about to send off the road- and bridge-building industry on another joy ride. According to The 2006-2009 State DOT Market for Design & Construction Firms, published by ZweigWhite, the following factors will keep designers in the driver's seat over the next three years:
- The market is growing. SAFETEA-LU is providing every state with a 19% increase in federal funding;
- Several state DOTs have reported that they are having difficulty keeping staff levels up to par due to employees retiring and the difficulty in finding highly skilled workers. This should make the agencies lean heavier on design consulting firms;
- State budgets appear to be on the rebound. A healthy bottom line means more DOTs will want to move road and bridge projects along and will again turn to outside designers; and
- The steady increase of design-build contracts. Due to the demand to accelerate projects, more states are marking more projects as design-build. At the start of 2006, 33 states were using the approach. As DOT staffs continue to shrink, this wave of design-build enthusiasm will only benefit designers in the private sector.
ZweigWhite, however, also offered a flip side to its forecast. Here is what could contribute to darker days:
- The rising cost of materials. As bids elevate to compensate for the rise, DOTs will have to dedicate more funds to fewer projects;
- The decline in gas-tax revenue. More states could suspend their gas tax, which would decrease funding for road and bridge construction;
- State budgets could crumble at any moment; and
- The DOT market continues to be very competitive.
Like I said, I’m through with the dumb questions, and I'm afraid there really are no right answers for the future of the DOT market. I think the gas-tax revenue will be the biggest factor slowing down the market. With gas prices steadily moving above $3 a gal, more motorists are starting to take steps to reduce consumption. My wife and I are carpooling more to work these days. I never thought I would see that day. I have the feeling more Americans are taking the same course of action. Furthermore, I’m waiting to see the rash of state gas-tax suspensions like we saw a couple of years ago. Yes, SAFETEA-LU is providing more money, but the driving force of that mechanism is the gas tax. I hope my gut feeling is a mere figment of my imagination.
Looking beyond 2009, I see more private firms becoming highway and bridge owners. This move will only strengthen the design consulting field. Privately run organizations know how to collect the money, but they will need help when it comes time to widen a road or build a new span.
As for my immediate projection, I hope designers will come up to me in a year or so and say, "You really blew that forecast. That was a dumb call." If I'm wrong, then design consulting firms will flourish. When that happens, I will be the one with the stupid smile on my face.
